Correlation Between Gladstone Investment and GUDANG GARAM

Can any of the company-specific risk be diversified away by investing in both Gladstone Investment and GUDANG GARAM at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Gladstone Investment and GUDANG GARAM into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gladstone Investment and GUDANG GARAM, you can compare the effects of market volatilities on Gladstone Investment and GUDANG GARAM and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Gladstone Investment with a short position of GUDANG GARAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and GUDANG GARAM.

Diversification Opportunities for Gladstone Investment and GUDANG GARAM

-0.36

Correlation Coefficient

Gladstone Investment  GUDANG GARAM

Very good diversification

The 3 months correlation between Gladstone and GUDANG is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and GUDANG GARAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUDANG GARAM and Gladstone Investment is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Gladstone Investment are associated (or correlated) with GUDANG GARAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUDANG GARAM has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and GUDANG GARAM go up and down completely randomly.

Pair Corralation between Gladstone Investment and GUDANG GARAM

Assuming the 90 days horizon Gladstone Investment is expected to generate 0.67 times more return on investment than GUDANG GARAM. However, Gladstone Investment is 1.49 times less risky than GUDANG GARAM. It trades about 0.05 of its potential returns per unit of risk. GUDANG GARAM is currently generating about -0.01 per unit of risk. If you would invest  907.00  in Gladstone Investment on October 4, 2024 and sell it today you would earn a total of  356.00  from holding Gladstone Investment or generate 39.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Gladstone Investment  vs.  GUDANG GARAM

Gladstone Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gladstone Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Gladstone Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

GUDANG GARAM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GUDANG GARAM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Gladstone Investment and GUDANG GARAM

The main advantage of trading using opposite Gladstone Investment and GUDANG GARAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment position performs unexpectedly, GUDANG GARAM can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in GUDANG GARAM will offset losses from the drop in GUDANG GARAM's long position.

The idea behind Gladstone Investment and GUDANG GARAM pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.